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January 23, 2012

Top Portfolio Products: Vanguard Launches 2060 Fund as Innealta Rolls Out Two New Funds

Other new products include an alternative income fund from Pyxis and a new managed income strategy from CLS

New products introduced over the last week include a target 2060 fund for young investors from Vanguard and two new funds from Innealta. In addition, Pyxis Capital brought out a new alternative income fund and CLS Investments introduced a new managed income strategy.

Vanguard announced Thursday that it has launched the Vanguard Target Retirement 2060 Fund (VTTSX) for young investors. In a single low-cost, index-based vehicle, the fund will provide age-appropriate exposure to domestic and international stocks, as well as domestic bonds, for investors who plan to retire and leave the workforce in or within a few years of 2060 or are roughly 18 to 20 years old.

To help novice investors get started, the minimum investment requirement for VTTSX is $1,000 (no minimum within a defined contribution plan), which is below Vanguard’s standard minimum of $3,000 for most funds. The expense ratio is expected to be 0.18%. The average industry expense ratio for a target-date fund in the fund's peer group is 0.60%, according to Lipper.

The Innealta Capital Country Rotation Fund is based on a quantitatively driven, tactical asset allocation approach that potentially invests in up to 20 countries based on the specific risk/reward characteristics of each. Assets not allocated to equities are invested in an actively managed portfolio of fixed-income ETFs. The strategic weight of each country is generally targeted to be 5%.

The Innealta Capital Sector Rotation Fund is based on a quantitatively driven, tactical asset allocation approach that potentially invests in up to 10 economic sectors based on the specific risk/reward characteristics of each. Assets not allocated to equities are invested in an actively managed portfolio of fixed-income ETFs. The strategic weight of each sector is generally targeted to be 10%.

Pyxis Management, L.P. announced on Tuesday the launch of the Pyxis Alternative Income Fund (HHFAX). Anchor Capital Management Group, Inc. will serve as the fund’s subadvisor. The fund invests both long and short across securities benchmarked to high yield corporate bonds, such as ETFs.

Unlike traditional long-only fixed-income strategies, it seeks to profit from both rising and falling prices while maintaining low correlation to traditional benchmarks and minimizing volatility through active hedges. It is expected to be classified in the Morningstar nontraditional bond category.

4) CLS Investments Launches Managed Income Strategy

CLS Investments, LLC announced Thursday the unveiling of its managed income strategy, which is individually tailored to clients seeking reliable and consistent short- and long-term income from a risk-budgeted and diversified portfolio of income-generating assets. The strategy divides client portfolios into three areas: income- and interest-producing investments that seek long-term growth and capital gains, a low-risk reserve account comprised of short-term corporate bonds for approaching income needs and a low-risk money market account for immediate income needs.

The liquidity of the short-term accounts and the income generated from the long-term investments eliminate the need for CLS to sell investments when the market is declining in order to meet a client’s cash flow needs. Clients can tailor the strategy by selecting reserve account and systematic withdrawal amounts suitable for their individual income needs. Investors with special tax considerations may choose a tax-conscious managed income option.